Energy Services

Baker Hughes | Energy Services | Halliburton

Halliburton CEO Talks About Failed BH Merger, Industry Turnaround
May 4, 2016May 4, 2016

David Lesar

Halliburton, the second largest oilfield services company in the world, released its first quarter 2016 update yesterday. Along with it, Halliburton CEO Dave Lesar held court with stock analysts on a ubiquitous quarterly earnings call. Among Lesar’s comments is that he thinks the oil and gas industry is right now beginning to turn more positive. Lesar believes that drilling will begin to pick up again later this year. He also had a number of comments, and questions, about the failed takeover/merger attempt with Baker Hughes (see Obama DOJ Kills Halliburton/Baker Hughes Merger, Deal “Terminated”). We found Lesar’s prepared remarks interesting and thought you would too…
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Energy Services | NiSource

NiSource 1Q16: The Gas & Electric Business is Quite Profitable
May 4, 2016May 4, 2016

NiSource service area

NiSource and Columbia Pipeline split up last summer (see NiSource/Columbia Pipeline Divorce is Final). Columbia retained the midstream business and is the more active of the two in the Marcellus/Utica Shale. However, NiSource with its Columbia Gas utility business is still an important user of Marcellus/Utica Shale gas–and therefore of interest to us. Yesterday NiSource issued their first quarter 2016 update. Being in the utility business ain’t a bad life. Pretty reliable income, even if it is regulated. In 1Q16 NiSource made $309.5 million before income taxes were paid, compared with $275.4 million in 1Q15 (a 12% increase). Below is the update for NiSource’s natgas and electric utility businesses…
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Columbia Pipeline Group | Energy Services | Iroquois Gas Transmission | TC Energy/TransCanada

TransCanada 1Q16: Sets its Sights on the Marcellus/Utica
May 4, 2016May 4, 2016

TransCanada Corporation is Canada’s largest midstream (i.e. pipelines and storage) company. TransCanada is the company that wanted to build out the Keystone XL oil pipeline into the United States, but the Obamadroids squashed it (it would flow nasty, icky oil through it). TransCanada is also making a major play to move into the Marcellus/Utica region by buying out/merging in Columbia Pipeline (see Rumor Comes True: TransCanada Buying Columbia Pipeline for C$13B). What’s happening with the buyout? We learn quite a bit from TransCanada’s first quarter 2016 update, released last Friday…
Read More “TransCanada 1Q16: Sets its Sights on the Marcellus/Utica”
Accidents | Energy Services | Industrywide Issues | Pennsylvania | Pipelines | Spectra Energy | Westmoreland County

Update on Spectra Pipeline Explosion Near Pittsburgh
May 3, 2016May 3, 2016

Yesterday MDN told you about the Texas Eastern Transmission Company (TETCO) pipeline explosion last Friday in Westmoreland County, PA (see Texas Eastern Pipeline Explodes near Pittsburgh, Antis Celebrate). We still don’t know what caused the explosion. Spectra Energy, TETCO’s owner, is working with the Pipeline and Hazardous Materials Safety Administration (PHMSA) to investigate the incident and several pipelines in the area back to service. Spectra shut down the flows of our pipelines in close proximity to the explosion “out of an abundance of caution.” The stoppage means about 1 billion cubic feet per day of natural gas is not going to New York and New England, causing a price spike in the region. One local homeowner was seriously burned and sent to the UPMC Mercy Hospital burn unit in Pittsburgh. His condition has been upgraded from critical to serious. Below is an update with the latest we can find about the explosion and aftermath…
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CNG/LNG | Energy Services | Exporting | Industrywide Issues | Pipelines | Regulation | Spectra Energy

Critical Project for Canadian LNG Exports Gets Favorable FERC Review
May 3, 2016May 3, 2016

Click for larger version

Spectra Energy’s Atlantic Bridge project has just gotten an important “favorable” Environmental Assessment (EA) from the Federal Energy Regulatory Commission. A favorable EA is a signal that FERC will, later this year, grant a full approval for the project. And that’s really good news for Canadian LNG export plants–and equally good news for Marcellus drillers. Here’s how this news all ties together. The Atlantic Bridge project is a series of upgrades to two different pipeline systems already in existence: the Algonquin Gas Transmission (AGT) pipeline and the Maritimes & Northeast Pipeline (M&NE). The two pipelines will be connected along the coast of Massachusetts, near Boston. Thing is, right now the M&NE flow gas from north to south, from Canada to the U.S. Part of the Atlantic Bridge project is to make M&NE bidirectional, able to flow gas from south to north. The AGT will collect gas from the prolific Marcellus via a third Spectra-owned pipeline–the Texas Eastern Transmission Company (TETCO) pipeline–delivering Marcellus gas to New England. Yes, much/most of the gas will go to New England, but excess gas produced during periods of the year when not as much gas is used in New England will then be available to flow on up to Canada and to one of several new LNG export facilities either in planning or under construction. It all starts with a favorable EA…
Read More “Critical Project for Canadian LNG Exports Gets Favorable FERC Review”
Baker Hughes | Energy Services | Halliburton | Industrywide Issues | M&A

The Road Ahead for Baker Hughes – Post Halliburton Deal
May 3, 2016May 3, 2016

Yesterday MDN brought you the news that the Halliburton buyout of Baker Hughes is now officially dead (see Obama DOJ Kills Halliburton/Baker Hughes Merger, Deal “Terminated”). So what’s ahead for Baker Hughes? First up is that they will get a $3.5 billion (with a “b”) payment from Halliburton tomorrow. At least, they’re supposed to. Baker Hughes says they will use $1.5 billion of the money to buy back company stock, and the other $1 billion to pay off certain debts. The company will also “rationalize” (i.e. downsize/cut) certain segments of its business–like the onshore pressure pumping business. You have to wade through lots of euphemisms and management gobbledygook speak, but here’s the Baker Hughes “path to the future” statement they issued yesterday…
Read More “The Road Ahead for Baker Hughes – Post Halliburton Deal”
Accidents | Energy Services | Industrywide Issues | Pennsylvania | Pipelines | Spectra Energy | Westmoreland County

Texas Eastern Pipeline Explodes near Pittsburgh, Antis Celebrate
May 2, 2016May 2, 2016

There was an explosion and fire in Spectra Energy’s Texas Eastern Transmission’s “Delmont Line 27” pipeline last Friday. The explosion occurred in Salem Township (Westmoreland County), PA, about 30 miles east of Pittsburgh. One man was seriously burned when his house caught on fire (his house was destroyed). Nine homes in the area of the explosion/blaze were evacuated. As of yesterday six of the nine were able to return to their homes. Texas Eastern Transmission is one of the largest natural gas pipelines in the U.S.–running from the Gulf Coast through Marcellus/Utica country to New Jersey. The really disgusting part was the way the NJ chapter of the radical Sierra Club immediately, with a few hours, used the explosion by implying this is what awaits homeowners if the PennEast Pipeline is built. FYI, the Texas Eastern pipeline was built in 1981 and the portion that exploded was last inspected in 2012. Below are pieces of news accounts and the running response from Spectra about the accident…
Read More “Texas Eastern Pipeline Explodes near Pittsburgh, Antis Celebrate”
Baker Hughes | Energy Services | Halliburton | Industrywide Issues | M&A | Regulation

Obama DOJ Kills Halliburton/Baker Hughes Merger, Deal “Terminated”
May 2, 2016May 2, 2016

It’s a sad day for Halliburton and Baker Hughes. The two companies intended to get married, with Halliburton buying out BH and merging it in a deal worth $35 billion (see Shotgun Wedding: Halliburton Forces Baker Hughes to Sell). That was in November 2014. Since then, the two companies have jumped through every hoop demanded of them, including shedding assets (see Halliburton/Baker Hughes Hold a Pre-Merger Garage Sale). By the end of last year, rumors were circulating that the deal is in trouble (see Whispers Turning in Chorus, Halliburton/BH Deal in Trouble). Then European regulators began throwing cold water on the deal (see Europe Puts Halliburton/BH Merger Under a Microscope). No problem–HalliHughes thought they could still pull it off. But then the bullies of the Obama Justice Department got involved and sued to block the deal (see Obama DOJ Sues to Block Halliburton/Baker Hughes Merger). We can’t remember a time when the DOJ opposed a big deal it ended up happening. And so it is with this one. The bullies have won. In a rare Sunday press release, Baker Hughes says the deal is now off–and Halliburton owes Baker Hughes $3.5 billion in a breakup fee–due by this Wednesday. Happy May Day, Halli!…
Read More “Obama DOJ Kills Halliburton/Baker Hughes Merger, Deal “Terminated””
Electrical Generation | Energy Services | Industrywide Issues | Lycoming County | Northumberland County | Pennsylvania | Pipelines | Regulation | Snyder County | UGI Energy Services | Union County

UGI Sunbury Pipeline Gets FERC Approval, Built by November?
May 2, 2016May 2, 2016

UGI Marcellus assets map – click for larger version

Contrary to the lies spread by anti-pipeline groups like THE Delaware Riverkeeper, the Federal Energy Regulatory Commission is no rubber stamp for the oil and gas industry. In December 2014 Pennsylvania utility company UGI pre-filed an application to build a new 35-mile pipeline to feed a natgas-powered electric generating plant in Snyder County, PA (see UGI Pre-Files with FERC for New Marcellus Pipeline in Central PA and UGI Building 35-Mile Pipeline for Panda Power Electric Plant). The project was estimated to cost $150 million–money that goes into the local economy. It took long enough, but last week the Federal Energy Regulatory Commission (FERC) finally approved the project. The 20-inch Sunbury Pipeline will start in Lycoming County and travel through Montour, Union, and Northumberland counties, cross the Susquehanna River and ending up at Hummel Station Plant in Shamokin Dam in Synder County…
Read More “UGI Sunbury Pipeline Gets FERC Approval, Built by November?”
Energy Services | Industrywide Issues | Pipelines | Tallgrass Energy

REX Buying Back Another 25% of Pipeline from Sempra
April 29, 2016April 29, 2016

REX Pipeline map – click for larger version

Tallgrass Energy, builder and operator of the mighty Rockies Express (REX) Pipeline issued their first quarter 2016 update yesterday. Among the interesting bits of news in the update is that Tallgrass is buying out Sempra Power & Gas’ 25% ownership interest in REX. Sempra Power & Gas is a subsidiary/division of Sempra Energy. Just last month Tallgrass bought out Sempra Energy’s existing ownership stake in REX for $440 million (see Tallgrass Buys Out Sempra’s Portion of REX Pipeline for $440M). Apparently a division of Sempra still owned a large stake in the pipeline, and now Tallgrass is buying out that interest as well. REX is a 1,712-mile pipeline which runs from Colorado and Wyoming to Ohio, originally built to flow western natural gas to the Midwest and East. But then the Marcellus/Utica took off like a rocket and all of a sudden there was no market for western gas in our neighborhood. So Tallgrass reversed the flow for part of the REX (see Rockies Express Pipeline Reverses Flow from Utica to Midwest). Tallgrass turned what could have been a company-killing decision into the crown jewel asset of the company, simply by reversing the flow. Here’s the 1Q16 update from Tallgrass…
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Energy Services | Patterson-UTI

Patterson-UTI 1Q16: $70M Loss, Rig Counts Down, Still Bleeding
April 29, 2016April 29, 2016

Each month MDN tracks the number of active rigs deployed by oilfield services drilling company Patterson-UTI Energy (see our Patterson-UTI stories here). Patterson deploys a number of rigs in the Marcellus/Utica, so we use them as a proxy for trends in rig counts in our region. The news has not been good for Patterson. The most recent monthly count, for March, was it’s lowest yet (see How Low Can it Go? Patterson-UTI Rig Count Plunges to 64 in March). Yesterday Patterson issued its first quarter 2016 update, and the news was, well, not very good. The company lost $70.5 million in 1Q16, compared with making $9.1 million in 1Q15. Revenues were WAY down–from $658 million in 1Q15 to $269 million in 1Q16. Ouch. Management expects to see a further 20% decline in the second quarter. Here’s the full, sad story…
Read More “Patterson-UTI 1Q16: $70M Loss, Rig Counts Down, Still Bleeding”
CARBO Ceramics | Energy Services | Industrywide Issues | Sand/Proppant

CARBO Ceramics 1Q16: $25M Loss, Drillers Not Completing Wells
April 29, 2016April 29, 2016

In addition to watching companies that operate drilling rigs, like Patterson-UTI Energy (see today’s companion story) for indications of how well (or not) the drilling industry is doing, another type of company to watch is a proppant company–the companies that supply sand and ceramic beads used in fracking. CARBO Ceramics is one of the premier such companies. Yesterday CARBO issued their first quarter 2016 update. Like Patterson, the news wasn’t so good. CARBO lost $25 million in 1Q16. In some cases E&Ps (exploration and production companies, or “drillers” here on MDN) are electing to complete previously drilled wells–and that’s good for CARBO. But in many cases drillers are electing to leave already-drilled wells uncompleted, i.e. not fracked, and that’s bad for CARBO. Here’s more of the good, the bad and ugly for CARBO Ceramics in 1Q16…
Read More “CARBO Ceramics 1Q16: $25M Loss, Drillers Not Completing Wells”
Baker Hughes | Energy Services

Baker Hughes: Rig Counts Will Slide Another 30% in 2Q16
April 28, 2016April 28, 2016

Yesterday Baker Hughes released its first quarter 2016 update. According to BH CEO Martin Craighead, “the industry faced another precipitous decline in activity” in 1Q16, which means it wasn’t good for BH. The company reported that revenues were down 42% year over year during the first quarter. Ouch. The company list $981 million for the quarter, nearly $1 billion! Double ouch. The company, which maintains THE rig count everyone watches, said rig counts will stabilize in the second half of the year, but the company expects 2Q16 rig count numbers to slide another 30%, to all-time historic lows. Triple ouch. What about the Halliburton buyout of BH? The deal expires in two days on April 30. BH says beyond that date the merger agreement does not automatically terminate–they may decide to continue riding the merger horse. Time will tell. Here’s the BH update from yesterday…
Read More “Baker Hughes: Rig Counts Will Slide Another 30% in 2Q16”
Accidents | Blue Racer Midstream | Energy Services | Industrywide Issues | Ohio | Pipelines | Washington County (OH)

OH Man Blames Pipeline Construction for Driving his Car into Ditch
April 28, 2016April 28, 2016

A Washington County, OH man is not happy with Blue Racer Midstream’s construction work on a new pipeline in the area. Heavy rain washed out gravel used as fill for the project. The man was on his way home (rural area) and ran into a ditch because, he says, the work was not done well and is “destroying” area roadways. Here’s the story of a man, a car, a ditch and a rainy night…
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Dominion Energy | Electrical Generation | Energy Services | Industrywide Issues | Statewide VA | Virginia

Dominion Brunswick NatGas-Fired Plant Begins Electric Generation
April 27, 2016April 27, 2016

Brunswick County Power Station – click for larger image

The newest member of Dominion’s power generation fleet, the 1,358 megawatt, natural gas-fired Brunswick Power Station (Brunswick County, Virginia) began producing electricity for customers on Monday, April 25. The station produces enough electricity to power 325,000 homes. The power plant will eventually be fed by Marcellus Shale gas coming from Dominion’s own $5 billion, 550-mile Atlantic Coast Pipeline. But right now it uses at least some Marcellus/Utica gas coming from the Williams Transco pipeline. Last September Williams completed and put into service the Virginia Southside Expansion project to feed this power plant (see Williams Completes $300M Pipeline Expansion in Virginia on Time). As we pointed out at the time, Williams has upgraded parts of the Transco in New Jersey and Pennsylvania in order to make the Transco bidirectional–pushing Marcellus/Utica gas southward. A plethora of these new plants in the region is an important new source of demand for abundant, clean-burning Marcellus/Utica Shale gas. Here’s the details about the latest clean energy plant from Dominion going online earlier this week…
Read More “Dominion Brunswick NatGas-Fired Plant Begins Electric Generation”
Energy Services | Halliburton | Industrywide Issues | Jobs | Lycoming County | Pennsylvania

Ouch: Halliburton Axed ~200 Jobs in Lycoming County Last Friday
April 27, 2016April 27, 2016

Just a few years ago Halliburton, the second largest oilfield services company in the world, employed 600 people in its operation center located in Lycoming County, PA. Today? There are 40 working there. Some 200 of Halliburton’s Lycoming employees were laid off last Friday. Lycoming County is relatively rural with the city of Williamsport as its county seat. Losing 560 jobs, 200 of them in one go, is a huge blow to the area. We grieve with those who have lost their jobs–and with their families who depended on those jobs…
Read More “Ouch: Halliburton Axed ~200 Jobs in Lycoming County Last Friday”